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Global Marketing, 6e (Keegan/Green)

Chapter 7 Segmentation, Targeting, and Positioning


1) Many Chinese women use whitening creams to lighten and brighten their complexions since
white skin is associated with wealth.
Answer: TRUE
Diff: 1
Page Ref: 202
2) Market Segmentation is the process of evaluating the segments and focusing marketing efforts
on a country, region, or group of people that has significant potential to respond.
Answer: FALSE
Diff: 2
Page Ref: 203
AACSB: Reflective Thinking
3) Sushi, Falafel, Tandoori Chicken or Pizza are in demand in many parts of the world. This
phenomenon can be due to pluralization of consumption and segment simultaneity.
Answer: TRUE
Diff: 2
Page Ref: 204
AACSB: Multicultural and Diversity
4) The fact that significant numbers of pizza-loving consumers are found in many countries
indicates that they are eating the exact same thing in all parts of the world.
Answer: FALSE
Diff: 1
Page Ref: 204
5) Conventional wisdom about market segmentation calls for acknowledging the emergence of
global market segments that transcend national boundaries.
Answer: FALSE
Diff: 2
Page Ref: 204
AACSB: Reflective Thinking
6) The process of global market segmentation begins with the choice of one or more variables to
use as a basis for grouping customers.
Answer: TRUE
Diff: 2
Page Ref: 205
AACSB: Reflective Thinking
7) A fact found by demographic segmentation is that by the year 2030, 20 percent of the U.S.
population or 70 million will be 65 years old or older.
Answer: TRUE
Diff: 2
Page Ref: 205
AACSB: Analytic Skills
8) The assumption of homogeneity should be the cornerstone of a company's market
segmentation effort.
Answer: FALSE
Diff: 2
Page Ref: 206
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9) About two-thirds of world GNI is generated in the Triad countries, whereas only about 12
percent of the world's population is located in those countries.
Answer: TRUE
Diff: 2
Page Ref: 206
AACSB: Reflective Thinking
10) The United States ranks number one among nations in terms of both per capita income and in
terms of income adjusted for purchasing power.
Answer: FALSE
Diff: 2
Page Ref: 206
AACSB: Analytic Skills
11) Swedish companies such as IKEA, Ericsson, and Saab have looked beyond their borders for
significant growth opportunities since they have a high per capita income.
Answer: FALSE
Diff: 2
Page Ref: 207
AACSB: Reflective Thinking
12) When assessing market segments in terms of income data, global companies should avoid
targeting countries with per capita incomes of less than $755.
Answer: FALSE
Diff: 2
Page Ref: 207
AACSB: Reflective Thinking
13) An extrapolation of current economic growth trends suggest that China, with its combination
of high real income growth and relatively low population growth, is a strong candidate to
become a leading world economic power.
Answer: TRUE
Diff: 2
Page Ref: 208
AACSB: Reflective Thinking
14) Ten most populous countries in the world account for roughly 60 percent of the world
population.
Answer: TRUE
Diff: 2
Page Ref: 208
AACSB: Analytic Skills
15) Using averages alone, it is possible to underestimate a market's potential, for example, fastgrowing, higher income segments are present both in India and China.
Answer: TRUE
Diff: 2
Page Ref: 208-209
AACSB: Reflective Thinking

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16) The vast majority of India's population comprises a "bullock cart" segment whose
households lack most comforts but typically own a television.
Answer: TRUE
Diff: 2
Page Ref: 209
AACSB: Reflective Thinking
17) A psychographic study showed that Porsche buyers could be divided into several distinct
categories, one consisting of "Top Guns" who buy Porsches and expect to be noticed.
Answer: TRUE
Diff: 2
Page Ref: 211
18) Categories such as "successful idealists" and "affluent materialists" can be used to describe
psychographic segments.
Answer: TRUE
Diff: 2
Page Ref: 211
AACSB: Reflective Thinking
19) The segmentation and targeting approach used by the same company can vary from country
to country.
Answer: TRUE
Diff: 2
Page Ref: 211
AACSB: Reflective Thinking
20) For behavior segmentation, marketers use the 80/20 rule when assessing the consumers'
usage rate, which means that 20 percent of the company's revenues or profits are accounted for
by 80 percent of the firm's products or customers.
Answer: FALSE
Diff: 2
Page Ref: 213
AACSB: Reflective Thinking
21) Global benefit segmentation is based on a marketer's understanding of the problem a product
solves, the benefit it offers, or the issue it addresses, regardless of geography.
Answer: TRUE
Diff: 2
Page Ref: 214
AACSB: Reflective Thinking
22) Based on the trends and segmentation of Europe's Single Market, marketers are particularly
advised to take the Golden Grays seriously and market brands that provide happiness,
convenience, and time savings.
Answer: TRUE
Diff: 2
Page Ref: 214
AACSB: Reflective Thinking
23) The widespread adoption of the Internet and other new technologies will result in new
segmentation approaches to be developed in response to changing business environment.
Answer: TRUE
Diff: 2
Page Ref: 216
AACSB: Reflective Thinking
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24) Thai Americans, Vietnamese Americans, and Chinese Americans, each of whom speak a
different language, can be separated by ethnic segmentation.
Answer: TRUE
Diff: 2
Page Ref: 215
AACSB: Analytic Skills
25) When assessing potential country target markets, management should rely heavily on its
network of contacts as a primary criterion for targeting.
Answer: FALSE
Diff: 2
Page Ref: 216
AACSB: Reflective Thinking
26) About 1.3 million cars are sold each year in India; in absolute terms, this is a relatively small
number.
Answer: TRUE
Diff: 2
Page Ref: 217
AACSB: Reflective Thinking
27) India is the world's fastest growing cell phone market with the industry expanding at a rate of
50 percent annually with 5 million new subscribers added every month. This is an indication of
continued private-sector growth.
Answer: FALSE
Diff: 2
Page Ref: 217-218
AACSB: Reflective Thinking
28) A market segment or country market characterized by strong competition may be a segment
to target since it will be easier to enter a proven market.
Answer: FALSE
Diff: 2
Page Ref: 218
AACSB: Analytic Skills
29) Honda first created the market for small-displacement dirt bikes and then moved up market
with bigger bikes targeted at casual riders.
Answer: TRUE
Diff: 1
Page Ref: 219
AACSB: Reflective Thinking
30) Marketing model drivers are key elements or factors required for a business to take root and
grow in a particular country market environment.
Answer: TRUE
Diff: 2
Page Ref: 220
AACSB: Analytic Skills

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31) In India, refrigeration is not widely available and this restricts many foreign companies to
market items that need refrigeration. This can be considered as one of the "enabling conditions"
that needs to be considered in a marketing model.
Answer: TRUE
Diff: 2
Page Ref: 220
AACSB: Analytic Skills
32) When making a decision about market entry timing, a company's management team should
understand that the first-mover always becomes the market leader.
Answer: FALSE
Diff: 2
Page Ref: 221
AACSB: Reflective Thinking
33) Before targeting the North American market, the Lexus marketing team succeeded in making
Lexus the number one luxury-car nameplate in Japan.
Answer: FALSE
Diff: 2
Page Ref: 222
AACSB: Reflective Thinking
34) Standardized global marketing is analogous to mass marketing in a single country and is also
known as differentiated target marketing.
Answer: FALSE
Diff: 1
Page Ref: 223
AACSB: Reflective Thinking
35) Differentiated global marketing represents a more ambitious approach than concentrated
target marketing.
Answer: TRUE
Diff: 2
Page Ref: 224
36) There is a significant difference between the "mass market" and the "premium market." In
the premium market customers are looking for a good deal whereas in the mass market
customers are looking for a product that fulfills their expectations.
Answer: FALSE
Diff: 2
Page Ref: 223-224
AACSB: Reflective Thinking
37) BMW's slogan "the ultimate driving machine," is an example of an attribute or benefit which
has proven successful in their positioning strategy.
Answer: TRUE
Diff: 2
Page Ref: 224-225
AACSB: Reflective Thinking

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38) IKEA, the home furnishings retailer based in Sweden, wraps itself in the Swedish flag
literally, since inside and out, their stores are decorated in the national colors of blue and yellow.
This is an example of local consumer culture positioning.
Answer: FALSE
Diff: 2
Page Ref: 228-229
AACSB: Reflective Thinking
39) Benetton uses the slogan "United Colors of Benetton" to position itself as a brand concerned
with the unity of humankind. This type of strategy is referred to as GCCP (global consumer
culture positioning).
Answer: TRUE
Diff: 2
Page Ref: 227-228
AACSB: Reflective Thinking
40) In France, the National Assembly approved a bill that would require Apple to share the
iTunes software codes with other companies so that music downloads would play on all digital
music players, not just iPods.
Answer: TRUE
Diff: 2
Page Ref: 230
AACSB: Reflective Thinking
41) Market segmentation represents:
A) targeting prospective customers.
B) finding customers who can respond to advertisement.
C) promoting products and services internationally.
D) identify customers who can help in promoting products.
E) an effort to identify and categorize customers based on common characteristics.
Answer: E
Diff: 2
Page Ref: 203
AACSB: Reflective Thinking
42) When identifying global market segments, a fundamental guiding principle should be the
need to determine:
A) shared demographic characteristics.
B) similar languages.
C) similar needs and buying behavior.
D) similar ethnic backgrounds.
E) similar geographic regions.
Answer: C
Diff: 2
Page Ref: 204
AACSB: Reflective Thinking

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43) Global marketing authority Theodore Levitt has noted that many ethnic and regional foods
sushi, for exampleis enjoying popularity in many countries of the world. This observation is
known as:
A) the pluralization of consumption.
B) the ethnicitization of consumption.
C) the democratization of consumption.
D) the sophistication of consumption.
E) the domestication of consumption.
Answer: A
Diff: 2
Page Ref: 204
AACSB: Reflective Thinking
44) Which of the following does not represent "conventional wisdom" regarding global
segmentation?
A) assume heterogeneity between countries
B) assume homogeneity within a given country
C) focus heavily on macro-level cultural differences
D) acknowledge the existence of within country differences
E) assigning secondary priority to within country microsegments
Answer: D
Diff: 3
Page Ref: 204
AACSB: Reflective Thinking
45) Income and population are two variables that can be used in which type of segmentation?
A) ethnic segmentation
B) demographic segmentation
C) psychographic segmentation
D) behavioral segmentation
E) gender segmentation
Answer: B
Diff: 2
Page Ref: 205
AACSB: Reflective Thinking
46) Ideally, for comparative purposes, GNI and other measures of national income converted to
U.S. dollars should be calculated on the basis of:
A) per capita income.
B) purchasing power parities.
C) high income countries.
D) low income countries.
E) local currency.
Answer: B
Diff: 2
Page Ref: 206-207
AACSB: Reflective Thinking

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47) Ericsson, IKEA, Saab, and other companies based in Sweden have looked beyond their
borders for significant growth market because:
A) it has high total annual income.
B) it has low total annual income.
C) it has a smaller population.
D) it is land locked geographically.
E) it has relaxed export policies.
Answer: C
Diff: 3
Page Ref: 207
AACSB: Reflective Thinking
48) The concentration of income in the high-income and large-population countries means that a
company can be "global" by targeting buyers in:
A) just 50 countries.
B) just 20 countries.
C) just 10 or fewer countries.
D) just 30 countries.
E) none of the above
Answer: C
Diff: 3
Page Ref: 208
AACSB: Analytic Skills
49) A global segment is referred to as "global elite" which include:
A) people between the ages of 12 and 19.
B) affluent, well-traveled persons.
C) graying population.
D) technology professionals.
E) persons having power.
Answer: B
Diff: 3
Page Ref: 209
AACSB: Analytic Skills
50) Based on 2007 projections, the top ten nations ranked by GNI does not include:
A) United States.
B) Japan.
C) Russia.
D) Spain.
E) Italy.
Answer: C
Diff: 3
Page Ref: 207
AACSB: Analytic Skills

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51) McDonald's operates in over 120 countries, however, 80 percent of its restaurants are located
in nine countries which does not include the following country market:
A) Australia.
B) Brazil.
C) Germany.
D) India.
E) Japan.
Answer: D
Diff: 2
Page Ref: 208
AACSB: Analytic Skills
52) Psychographic segmentation involves grouping people in terms of their:
A) combined household income.
B) age and income.
C) attitudes, values and lifestyle.
D) psychological well being.
E) gender.
Answer: C
Diff: 2
Page Ref: 210-211
AACSB: Reflective Thinking
53) Porsche AG uses the label "Top Guns" to describe one segment of its customers, namely
those who care about power and control and who expect to be noticed. Such a profile would be
based on which type of segmentation?
A) demographic
B) occupational
C) psychographic
D) behavioral
E) gender
Answer: C
Diff: 2
Page Ref: 210-211
AACSB: Reflective Thinking
54) A marketing manager for the Mars candy company is studying a single-country
psychographic profile that includes segment labels such as "Cossacks" and "kuptsy." What
country does the survey cover?
A) India
B) Japan
C) Russia
D) China
E) Vietnam
Answer: C
Diff: 2
Page Ref: 212

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55) "Generation Y," "Golden Grays," and "Globerations" are three market segments that have
been described in:
A) Japan.
B) Russia.
C) the European Union.
D) the United States.
E) Brazil.
Answer: C
Diff: 2
Page Ref: 214
AACSB: Reflective Thinking
56) Which of the following is not a characteristic associated with the Golden Grays segment in
Europe's single market?
A) consider it important to mix fun and work
B) enjoy high-tech gaming
C) deluged with passive information
D) expect biotechnology to extend life expectancy
E) share few family activities
Answer: E
Diff: 3
Page Ref: 214
AACSB: Reflective Thinking
57) Which of the following is not a characteristic associated with the Generation Y segment in
Europe's single market?
A) share numerous family activities
B) less reverence toward established authorities
C) view leisure time in "pay-per-play" terms
D) increasingly tech-savvy
E) deluged with positive information
Answer: E
Diff: 3
Page Ref: 214
AACSB: Reflective Thinking
58) Tambrands markets feminine hygiene products around the globe. The company divides
markets on the basis of past, present, and future product usage. Which kind of segmentation does
this represent?
A) demographic
B) occupational
C) psychographic
D) behavioral
E) geographic
Answer: D
Diff: 2
Page Ref: 213-214
AACSB: Reflective Thinking

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59) Diageo PLC; V&S Vin & Spirit AB; and Seagram and other marketers know that Russians
consume a great deal of Vodka. This type of market segmentation can be classified as:
A) demographic.
B) behavioral.
C) psychographic.
D) occupational.
E) benefit.
Answer: B
Diff: 2
Page Ref: 212
AACSB: Reflective Thinking
60) "Usage rates" and "user status" are important criteria for which segmentation variable?
A) demographic
B) occupational
C) psychographic
D) behavioral
E) benefit
Answer: D
Diff: 2
Page Ref: 213-214
AACSB: Reflective Thinking
61) Which of the following is probably the biggest impediment to Tambrands's efforts to expand
the market for its Tampax brand feminine hygiene products in developing nations?
A) lack of demographic information
B) underdeveloped distribution infrastructure
C) religious and cultural mores
D) preference for less expensive local brands
E) lack of advertisement and promotion
Answer: C
Diff: 2
Page Ref: 215
AACSB: Multicultural and Diversity
62) Procter & Gamble has identified a group of consumers in Europe who are willing to pay
premium prices for pet food that will improve the health of their pets. This is an example of
________ segmentation:
A) demographic
B) psychographic
C) ethnic
D) behavioral
E) benefit
Answer: E
Diff: 2
Page Ref: 214-215
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63) Which of the following is true about efforts by automakers to target the Hispanic segment in
the United States?
A) Honda, Toyota, Ford, and GM all began targeting the segment years ago.
B) Honda and Toyota began targeting the segment years ago; Ford and GM launched their efforts
more recently.
C) Ford and GM began targeting the segment years ago; Honda and Toyota launched their efforts
more recently.
D) Only Ford and GM are targeting the Hispanic segment.
E) none of the above
Answer: B
Diff: 2
Page Ref: 215-216
AACSB: Analytic Skills
64) Which of the following best describes the decision by South Korean automaker Kia Motors
about targeting the U.S. automotive market?
A) Kia is staying away because Japanese competition is too strong.
B) Kia is staying away because of slow growth in the sport utility segment.
C) Kia is aggressively launching inexpensive, value-priced vehicles.
D) Kia is selectively targeting upscale U.S. buyers.
E) Kia is avoiding America because it cannot afford the expense of a U.S. product launch.
Answer: C
Diff: 2
Page Ref: 217-218
AACSB: Analytic Skills
65) Which of the following criteria should marketers use when assessing opportunity in global
target markets?
A) current size of the segment
B) anticipated growth potential
C) competition
D) compatibility with company's overall objectives.
E) all of the above
Answer: E
Diff: 2
Page Ref: 217
AACSB: Reflective Thinking
66) Basic criteria that marketers should keep in mind while assessing opportunities in global
market include all of the following except:
A) current size of the market segment.
B) anticipated growth potential of the market.
C) compatibility with company's overall objectives.
D) competition in the market.
E) securing first mover advantage.
Answer: E
Diff: 3
Page Ref: 217
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67) The feasibility of targeting a particular market segment can be negatively impacted by
various factors which does not include:
A) regulatory hurdles.
B) cultural barriers.
C) lack of distribution system.
D) time required to establish business.
E) surplus demand.
Answer: E
Diff: 2
Page Ref: 219
AACSB: Reflective Thinking
68) Companies like Coca-Cola had the first-mover advantage since they were the first company
to enter a global market. However, there are also first-mover disadvantages which include:
A) best chance of becoming world leader.
B) advantage in adapting to the local culture.
C) lead in advertising and promotion exposure.
D) gain business experience.
E) substantial investments in marketing.
Answer: E
Diff: 2
Page Ref: 221
AACSB: Reflective Thinking
69) Managers must decide how well a company's product fits the country market by asking the
following questions except:
A) Will adaptation be required?
B) Will import restriction drive up the product price?
C) Is it advisable to source locally?
D) Will strong home currency have an adverse impact on product price?
E) Will it be possible to neglect home country regulations?
Answer: A
Diff: 2
Page Ref: 221
AACSB: Reflective Thinking
70) The basis for global marketing expert David Arnold's framework for screening intercountry
comparisons include:
A) demographic data.
B) "top-down" segmentation analysis.
C) "bottom-up" segmentation analysis.
D) income level.
E) population data.
Answer: C
Diff: 2
Page Ref: 220
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71) The Swatch Group markets watches in all price ranges, from the Swatch brand at the low end
to luxury brands such as Longines, Blancpain, and Breguet. Which target market strategy does
this illustrate?
A) standardized global marketing
B) concentrated global marketing
C) differentiated global marketing
D) psychographic global marketing
E) none of the above
Answer: C
Diff: 2
Page Ref: 223-224
AACSB: Reflective Thinking
72) Positioning refers to the act of:
A) determining on what points on the globe to target.
B) ensuring a choice retail shelf location.
C) differentiating a brand in customer's mind.
D) formulating a private label strategy.
E) formulating a companion product.
Answer: C
Diff: 2
Page Ref: 224
AACSB: Reflective Thinking
73) For years, ads for Volvo automobiles stressed safety features and protection in the event of a
crash. Thus, Volvo automobiles developed a reputation based on which positioning strategy?
A) use/user
B) attribute/benefit
C) competition
D) high touch
E) quality/price
Answer: B
Diff: 2
Page Ref: 224-225
AACSB: Reflective Thinking
74) Ads by BMW advertise it as the "ultimate driving machine" which is described as positioning
based on:
A) high touch.
B) use/user.
C) attribute/benefit.
D) competition.
E) quality/price.
Answer: C
Diff: 2
Page Ref: 224-225
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75) Some of Body Shop's recent advertising has emphasized the difference between the
company's principles and those of "mainstream" cosmetics companies on such issues as animal
testing. As described here, Body Shop's ads illustrate positioning by ________.
A) competition
B) niche
C) quality/price
D) attribute/benefit
E) culture
Answer: A
Diff: 2
Page Ref: 225-226
AACSB: Reflective Thinking
76) Which of the following is generally true about the marketing of high-touch products such as
fine china and crystal?
A) It relies equally on specialized information and image.
B) It relies less on image and more on specialized information.
C) It relies less on specialized information and more on image.
D) Neither image nor specialized information is relevant to the marketing of high-touch
products.
E) It relies partially on specialized information and partially on image.
Answer: C
Diff: 2
Page Ref: 227-228
AACSB: Reflective Thinking
77) Consumers shopping for high-touch products such as fine perfume are generally energized
by ________ motives.
A) emotional
B) rational
C) both emotional and rational
D) neither emotional nor rational
E) high tech
Answer: A
Diff: 2
Page Ref: 227-228
AACSB: Reflective Thinking
78) When a marketer understands that a product satisfies a buyer's rational criteria while also
evoking an emotional response, the marketer should:
A) only target consumers in high-income countries.
B) utilize a multitiered targeting strategy rather than a concentrated strategy.
C) commission psychographic segmentation studies to augment demographic data.
D) create advertising that reflects a bipolar, high-tech and high-touch approach.
E) follow normal targeting strategy.
Answer: C
Diff: 2
Page Ref: 227-228
AACSB: Reflective Thinking

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79) Which of the following is true of advertising for the Heineken and Foster's brands in the
United States?
A) Both Heineken and Foster's utilize the GCCP strategy.
B) Both Heineken and Foster's utilize the FCCP strategy.
C) Heineken utilizes the GCCP strategy; Foster's utilizes the FCCP strategy.
D) Heineken utilizes the FCCP strategy; Foster's utilizes the GCCP strategy.
E) Heineken utilizes the LCCP strategy; Foster's utilizes the GCCP strategy.
Answer: C
Diff: 2
Page Ref: 226-228
AACSB: Reflective Thinking
80) Thinking about U.S. advertising for Foster's and Budweiser beer, one can observe that:
A) Foster's uses FCCP, Budweiser uses LCCP.
B) Foster's uses LCCP, Budweiser uses FCCP.
C) both Foster's and Budweiser use LCCP.
D) both Foster's and Budweiser use FCCP.
E) both Foster's and Budweiser use GCCP.
Answer: A
Diff: 3
Page Ref: 226-228
AACSB: Analytic Skills
81) What is psychographic segmentation and how do marketers use it in targeting different world
markets?
Answer: Psychographic segmentation involves grouping people in terms of their attitudes,
values, and lifestyles. Respondents are carefully selected by asking questions to assess their
attitudes, values, and lifestyles. There are different companies that provide services and help in
assessing these psychographic variables. Different groups are given names based on the
attributes which describe their attitudes, values, and lifestyles. Automakers rely on this
segmentation since the purchase behavior of a considerable size of consumers is dependent on
psychographic values. A psychographic study showed that Porsche buyers could be divided into
several distinct categories. One of the categories, "Top Gun" was found to buy Porsches and
expect to be noticed. Proud Patrons and Fantasists, on the other hand, found such conspicuous
consumption as irrelevant. Thus, automakers can design autos based on the preferences of
populations grouped under each category. It is preferable to market to a mind-set rather than a
particular age group. For finding such a group, psychographic studies are important. These
analyses are expensive and require careful interpretations. SRI International, one of the market
research organizations, has developed VALS/VALS 2 analyses of consumers based on
psychographic values. A research team in Europe identified four lifestyle groups: Successful
Idealists, Affluent Materialists, Comfortable Belongers and Disaffected Survivors. The first two
groups represent the elite, while the latter two represented the mainstream European consumers.
It should be noted that the segmentation and targeting approach used by a company can vary
from country to country. Methods that can truly assess a population segment of a country should
be employed for psychographic segmentation.
Diff: 2
Page Ref: 210-213
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82) Due to globalization "it is a small world after all." Also, vast scale migration of populations
due to various reasons, including opportunities, has created large segments of ethnic population.
Considering these facts, highlight the ethnic segmentation and its importance.
Answer: Due to several reasons, in many countries the population consists of ethnic groups. For
example, in the United States there are three major ethnic segments African/Black Americans;
Asian Americans; and Hispanic Americans. In other countries there are such different
combinations of ethnic population. Each segment shows great diversity and can be further
subdivided. Even those coming from one country may have differences in language, culture,
religion, and other attitudinal aspects. Their purchasing behavior is different within groups and
sub-groups. From a marketing standpoint these groups offer great opportunity. Companies in a
variety of industry sectors, primarily food and beverages; household goods, and financing
services can benefit by targeting these groups. For example, Japanese automakers have been
successful in targeting ethnic populations in different parts of the world.
Diff: 2
Page Ref: 215-216
AACSB: Reflective Thinking
83) What are some of the pitfalls in assessing market potential and choosing target markets or
segments?
Answer: After segmenting the market the next important step is to assess the attractiveness of
the identified segments. This is an important part when assessing emerging country markets as
potential targets. Several potential pitfalls in assessment should be taken into account. In general,
there is a tendency to overstate the size and short-term attractiveness of individual country
markets. This can happen if estimates are based primarily on demographic data such as income
and population. For example, the population figures in India and China can create a bloated
image. Short-term profitability may be hard, due to prevailing conditions in these emerging
markets. Persistence and long-term outlook often pays off in new markets. A second pitfall may
originate from pressures placed on marketers by shareholders or competitors. The possibility of
missing out on entering a condition is in itself a stress-causing factor. Marketers may find
themselves overwhelmed at times by such pressures and the urge to react quickly. Another factor
may be the decisions made based on convenience or opinion of persons/advisors not residing in
the home country. The right representatives or distributors should be selected in order to be
successful.
Diff: 2
Page Ref: 216-217
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84) In India, 60 million middle class men and women earn more than $ 275 per month. The
segment is growing rapidly and is expected to increase to 73 million by 2010. Young consumers
are buying international brands and the economy is strong. India is also the world's fastest
growing cell phone market. The industry is expanding at a rate of 50 percent annually, with 5
million new subscribers added every month. Still, barriers originating in the political and
regulatory environments have shackled private-sector growth. Considering all of the abovementioned aspects, is the market segment large enough for a company to utilize the opportunity
and make a profit? Does it have enough potential for future growth to make it attractive for any
company to pursue a long-term strategy?
Answer: All of the influencing factors should be taken into consideration before targeting any
country. It is possible that the segment in a single-country market might be small, even a narrow
segment can be served profitably if the segment exists in several countries. One of the major
factors that should be considered is the purchasing power. In India the purchasing power is seen
by the purchasing of international branded items, although there is a big disparity among income
levels. The segment of the population is considerable to portray profit by selling goods and
services. Percentages, therefore, can be deceiving in such situations. Also, by virtue of its size
and purchasing power, the global segment can be extremely attractive to consumer goods
companies. The huge country market prevalent in India or China, combined with the segment
size and growth potential, has to be taken into account. There may also be differences between
populations residing in urban areas compared to the ones in rural areas. Although the majority of
population resides in rural areas in India, the numbers of urban consumers are large enough and
will be able to afford different consumer goods. The fact that there is a huge market for cell
phones is indicative of the potential business opportunities. Consideration should be given to all
these factors before entering into India or any other similar country.
Diff: 2
Page Ref: 218-219
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85) Assume that the market segment is judged to be large enough, and the strong competitors are
either absent or deemed to be vulnerable, then is it safe to enter the country? Justify your answer
by giving reasons.
Answer: If the market segment is judged to be large enough and there is no strong existing or
potential competitors, one should not assume that it is safe to enter the country. There are several
other factors that can negatively impact a business. For example, significant regulatory hurdles
may be present that limit market access. The company may also encounter cultural barriers or
religious restrictions. Other marketing-specific issues can arise. For example, in India, three to
five years are required to build an effective distribution system for many consumer products.
Also, the approvals may take a considerably long period of time. Thus, apparent potential does
not guarantee success. Managers have a difficult decision in such conditions. If there are certain
prevailing conditions that require adaptation of products, then that should be taken into account.
Also, it is important to consider the question of whether targeting a particular segment is
compatible with the company's overall goals, its brand image, or established sources of
competitive advantage.
Diff: 2
Page Ref: 219
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86) Discuss the basics of a framework for selecting target markets highlighting the salient
features of David Arnold's framework.
Answer: A framework for selecting target markets should take into account the market size of
the targeted market. The market size should then be multiplied by the competitive advantage in
that country. Multiplying the market size and competitive advantage index yields a market
potential. The next step in the analysis requires an assessment of the various market access
considerations. Finally, multiplying the market potential by the terms of access index gives the
final market potential. This framework takes into account the competitive advantage, market
potential and the terms of access. This framework should prove useful as a preliminary screening
tool for intercountry comparisons. However, it does not go far enough in terms of assessing
actual market potential. Global marketing expert David Arnold has developed a framework that
goes beyond demographic data and considers other marketing-oriented assessments of market
size and growth potential. Thus, instead of a "top-down" segmentation analysis beginning with,
for example, income or population data from a particular country, Arnold's framework is based
on a "bottom-up" analysis that begins at the product-market level. The product-market refers to a
market defined by a product category. For example, in the automotive industry that would refer
to luxury car market. Arnold's framework incorporates two core concepts: marketing model
drivers and enabling conditions. Marketing model drivers are key elements or factors required
for a business to take root and grow in a particular country market environment. The drivers may
differ depending on whether a company serves consumer or industrial markets. Enabling
conditions are structural market characteristics whose presence or absence can determine where
the marketing model can succeed. For example, in India, refrigeration is not widely available in
shops and market food stalls. This creates challenges for storing dairy products and confections.
So the enabling conditions are very important. After marketing-model drivers and enabling
conditions have been identified the management should weigh the estimated costs associated
with entering and serving the market with potential short- and long-term revenue streams. One
way to determine the marketing model drivers and enabling conditions is to create a productmarket profile.
Diff: 2
Page Ref: 220-221
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87) After evaluating the identified segments, decisions have to be made whether to pursue a
particular opportunity or not. Assuming the decision is made to proceed, an appropriate targeting
strategy must be developed. Explain the basic categories of target marketing strategies and how
they can be implemented.
Answer: The three basic categories of target marketing strategies are: standardized marketing,
concentrated marketing, and differentiated marketing. Standardized global marketing is
analogous to mass marketing in a single country. It involves creating the same marketing mix for
a broad mass market of potential buyers. It is also known as undifferentiated target marketing
since it is based on the premise that a mass market exists around the world. Product adaptation is
minimized, and a strategy of intensive distribution ensures that the product is available in the
maximum number of retail outlets. The appeal of standardized global marketing is due to the
lower production costs. The concentrated target marketing involves devising a marketing mix to
reach a niche. A niche is single segment of the global market. For example, in cosmetics, Chanel
has used to target the upscale, prestige segment of the market. Concentrated targeting is also the
strategy employed by the hidden champions of global marketing. Companies unknown to most
people that have succeeded by serving a niche market that exists in many countries. These
companies define their markets narrowly and strive for global depth rather than national breadth.
The narrowing of market definition is the key principle in this strategy. The third category,
differentiated global marketing represents a more ambitious approach than concentrated target
marketing. It is also known as multisegment targeting. It entails targeting two or more distinct
market segments with multiple marketing mix offerings. This strategy allows a company to
achieve wider market coverage. For example, in the sport utility vehicle segment Rover has a
Range Rover at the high end of the market. A scaled down version, the Land Rover Discovery is
offered which competes directly with the Jeep Grand Cherokee. The Freelander, its newest
vehicle, has been on sale in Europe for several years. Thus, there is a multi-pronged approach to
marketing.
Diff: 2
Page Ref: 222-223
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88) Harley-Davidson, a very popular adventure seeking company is very well known in the
United States. How did they develop "think global, act local" strategies to target adventure
seekers in global markets?
Answer: Harley-Davidson (H-D) company has grown impressively during its first 100 years of
operation. As the twenty-first century began, they started moving overseas with having
dealerships in about 48 countries. There was a six-month waiting period in many countries to get
their motorcycles. The company was very slow to move in overseas markets as well as slow in
reacting to a growing threat from Japanese manufacturers. Their marketing efforts were not very
aggressive and even their print advertising used word-for-word translations of their U.S. ads. By
late 1980's they realized that they wer losing their competitive edge and they needed to think
global but act local. In Japan, H-D's rugged image and high quality helped make it the bestselling imported motorcycle. Still their tag line from the U.S., "One steady constant in an
increasingly screwed-up world" did not go very well with Japanese consumers since they really
did not connect with the meaning of the slogan. Finally, the president of the H-D's Japanese
division convinced the U.S. manufacturer to use advertising campaigns using Japanese
characters and verbiage. A rickshaw and a geisha represented the background depicting the
Japanese fashion and customized bikes. In Europe, H-D discovered that an "evening out" means
something different than it does in America. The company sponsored a rally in France, where
beer and live rock music were available until midnight. The rally went until 3 or 4 am. Again, it
shows the cultural differences that needed to be considered by H-D. The company had to make
design changes since German bikers often traveled at a speed exceeding 100 miles per hour.
Also, the German marketing effort included focusing on accessories to increase rider protection.
They realized the core picture and demand of the European customers and developed their
strategies accordingly. The demand increased considerably and those who were driving
motorbikes were actually high-income earners. The company intentionally keeps low production
limits to emphasize high quality.
Diff: 2
Page Ref: 213-215
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89) Colgate Total toothpaste is positioned as the brand that addresses all aspects of oral health.
Such positioning is very important from the business point of view. How does positioning help in
deciding on a marketing strategy? What are the differences between using "attribute or benefit"
and "quality and price" as positioning strategy?
Answer: Positioning refers to the act of differentiating a brand in customers' minds in relation to
competitors in terms of attributes and benefits that the brand does and does not offer. It is the
process of developing strategies for marketing purposes. It is frequently used in conjunction with
the segmentation variables and targeting strategies. "Attribute or benefit" strategies are used to
expose a particular product attribute, benefit or other special feature. Aspects such as economy,
reliability, multiple uses, durability, and simplicity are very commonly used to describe the
attributes of a product or service. For example, Visa's advertising theme "It's Everywhere You
Want to Be" exposes its benefit of being useful at any place in the world. Thus, these types of
slogans, themes, or jingles very cleverly outline the benefits or attributes of a product. A similar
strategy that is used is related to "Quality and Price." This strategy can be considered in light of a
continuum from high fashion/quality and high price to good value. Swatch watches advertise
their quality, Swiss origin, as well as affordable price. This way price is always tied to the quality
and durability of the product or service.
Diff: 2
Page Ref: 224-225
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90) What are the major differences between Global, Foreign, and Local consumer culture
positioning? Why are these differences significant? Give examples of how companies are trying
to lure customers using these positioning strategies.
Answer: Global consumer culture positioning (GCCP) is defined as a strategy that identifies the
brand as a symbol of a particular global culture or segment. It has proven to be an effective
strategy for communicating with global teens, cosmopolitan elites, and globe- trotting laptop
warriors who consider themselves members of a transnational commerce culture. For example,
Sony's slogan "My first Sony" is positioned as the electronics brand for youngsters around the
globe with discerning parents. Benetton uses the slogan "United Colors of Benetton" to position
itself as a brand concerned with the unity of humankind. Categories of products that lend
themselves to this positioning are both associated with high levels of customer involvement and
by a shared "language" among users. High tech products such as iPod; iPhone; MP3 players;
video cameras; and all such technology-prone items fall into these categories.
Foreign consumer culture positioning (FCCP) associates the brand's users, use occasions, or
production origins with a foreign country or culture. Foster's Brewing Group's U.S. advertising
proudly uses the brand's nation origin in all of its print ads and other promotions as being
Australian. Local consumer culture positioning (LCCP) strategy associates the brand with local
cultural meanings, reflects the local culture's norms, portrays the brand as consumed by local
people in the national culture, or depicts the product as locally produced for local consumers.
Budweiser's U.S. advertising particularly focuses on local aspects.
Diff: 2
Page Ref: 226-230
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